An Introduction to Paid Time Off Banks

Many people have heard of Paid Time Off (PTO) banks, but the contours of such policies are often little understood, especially outside the human resources world. To shed light on PTO banks, CLASP and the Institute for Women’s Policy Research (IWPR) have released a report using Bureau of Labor Statistics data to explore what is known, and what needs more study, about PTO banks. This report is a first step in understanding PTO banks so that further questions about PTO banks and how they affect low-wage workers and their employers can be explored.

PTO banks are an alternative to traditional paid leave plans. PTO banks consolidate multiple types of leave (paid vacation, sick, and personal days) into a single bucket, which workers can draw upon for absences. About 19 percent of private industry employees in the U.S. have access to a PTO bank. PTO banks are more common for higher wage and full time workers and are more likely to be offered at larger businesses.

Many low-wage workers don’t have access to any paid leave at all; 41 percent of low-income working parents (with household incomes below twice the federal poverty level) do not receive paid sick leave, vacation days, personal days, or other forms of compensated leave. Low-wage workers are less likely to have access to any paid time off regardless of whether it is in a traditional form or as a PTO bank. While 51 percent of employees in the lowest wage quartile have access to paid vacation time, only 9 percent have access to a PTO bank. In comparison, 89 percent of employees in the highest wage quartile have paid vacation time and 28 percent have access to a PTO bank. This means that millions of workers face difficult decisions like whether to take a needed day off work to care for a sick child or visit the doctor and risk losing a day’s wages (or even their jobs). Paid leave not only helps keep workers and communities healthy, but helps workers balance work and family obligations and stay productive. Unfortunately, there is no federal standard requiring these types of paid leave.

In Washington, D.C. an employer with experience of PTO banks has good things to say about how paid leave has impacted his workers and their business. Bradley Graham, co-owner of Politics & Prose, said in a recent BNA Human Resource Report article that ‘‘Some employers worry that too generous a leave policy will be abused by workers and will cost the company too much money in missed hours,” but that “employees have appreciated [their PTO policy] and it has not been abused.” Graham noted that he thinks the policy shows respect for the staff and makes economic sense. You can also see Graham explaining how Politics & Prose implemented the D.C. Sick and Safe Leave Act in a recent Spotlight on Poverty video. Spotlight on Poverty is a CLASP-managed initiative to highlight perspectives on issues affecting low-income families. In that same article, Stacey Bashara who helps run a web development firm in Chicago, discussed what PTO banks have meant for her employees. Bashara is also a supporter of the Illinois paid sick days campaign. CLASP will continue to research and investigate PTO to identify pros and cons for low wage workers.

PTO banks are just one vehicle employers may use to give employees paid time off. While this paper is a start in understanding PTO banks, the real work is ensuring that workers at all wage levels have access to some form of paid time off so they can take care of their own health and that of their families without losing income or a job.